UPPSALA, Sweden—A special meeting of Argonaut shareholders in early June formally approved the sale of the company's assets and consumables and process instrument business to Biotage, a move that strengthens the company's offerings in medicinal chemistry, thermal synthesis, cleanup and purification systems. Total purchase price amounted to 145 million Swedish krona or about $21.2 million. In all, sales from Argonaut products are expected to add over $18 million in annual sales to Biotage's bottom line, an increase of roughly 25 percent.
According to Dave Patteson, president Biotage's discovery chemistry group, based in Charlottesville, Va., Argonaut's product range included both complementary products, as well as offerings to help create a complete medicinal chemistry offering. These included thermal heating and cooling systems and purification products and its solid phase extraction (SPE) products sold under the Advantage, Endeavor, FlashMaster and IST brand names.
"The SPE business filled a void in the chemistry process for us," says Patteson. "If you consider that the drug disc process is synthesis, workup and purification, the combination of Argonaut and Biotage gives us the strongest position in the market for synthesis the strongest position in the market for purification. and with the solid phase extraction line and all of their bulk sorbents, a tremendous workup offering as well."
The acquisition of Argonaut was some time in the making, as the two companies had participated in cooperative development and marketing projects dating to the late 1990s. Talks about combining the two companies have been ongoing, following Biotage's acquisition by Pyrosequencing in 2003 which created the current company. "All of us, at both companies, have long held the belief that we would be a very strong company when put together," says Patteson.
While both companies were selling in many cases to the same customers, Biotage could benefit from existing Argonaut sales relationships in areas where it was not as strong and vice versa. Likewise, Patteson expects a more balanced sales penetration in North America, the U.K. and Europe. "If you look at Biotage's sales pre-acquistion, about 55 to 65 percent of our turnover was in North America," he says. "Argonaut was exceedingly strong in the U.K. and in Europe, so this should help balance our sales geographically."
Likewise, the acquisition will boost the consumables portion of the combined business to more than 60 percent of sales, which should create a more even and reliable revenue stream.
Biotage acquired for one year the rights to use the Argonaut name of products it acquired, but will transition all the products to the Biotage name by early next year. However, the company plans to keep the IST brand name on the line of sorbent products because of strong loyalty in the market to that particular brand.
Manufacture of the products will be shifted from Argonaut's plant in California to Biotage's Charlottesville facility, a transition the company expects to complete by the end of the third quarter this year, with only a "nominal" increase in the current workforce of nearly 100, Patteson says.
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